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What Is A Merchant Of Record: How Does MoR Cut eCommerce Risk?

As an eCommerce SaaS business, it’s likely you’ll end up selling your products across national and global markets.

However, there is a significant challenge in handling complex transactions, especially when a SaaS business goes global. You suddenly have to process credit card payments, billing, tax, and legal compliance. And all this while at the mercy of an industry full of ever-changing rules and regulations.

The good news is that using a Merchant of Record (MoR) model can make your job a lot easier, simplifying business operations while minimizing risk.

Merchant of Record (MoR)

What Is a Merchant of Record?

An MoR is a legal entity or organization that acts as a reseller between two parties in an eCommerce transaction. The MoR takes responsibility for reselling its vendor’s products to their customers around the world, all the while providing you with the tools needed to manage your overall business operations.

What is a Merchant Of Record Responsible For?

The MoR is responsible for the entire customer interaction, from the moment the buyer initiates the purchase process until the customer receives their product. Even then, the MoR is still working away in the background throughout the entire customer lifecycle, taking responsibility for subscription management, support, reconciliation, managing refunds, and chargebacks, maintaining international tax compliance, and taking care of currency conversion.

The MoR is also responsible for ensuring compliance with the Payment Card Industry Data Security Standards (PCI DSS), data privacy regulations, and other rules and regulations specific to the countries and regions they operate in.

The MoR is essentially the seller of the product, taking care of all the complex responsibilities that come with it. This means there’s no need to assume financial liability or maintain banking relationships, merchant accounts, and payment gateways.

How the Merchant of Record Model Works (In 5 Steps)

The MoR model is simple:

➡️ A customer initiates the purchase process on the vendor’s website and is then taken to the checkout page, hosted by the MoR solution.

➡️ When the shopper makes a payment, a single transaction occurs between the MoR (reseller) and the end-user.

➡️ The MoR passes the right of use ownership for the product from the vendor to the customer.

➡️ When the transaction is complete, the soft descriptor on the customer’s credit card statement is usually the website’s name where the purchase took place or a combination of the vendor and MoR.

➡️ The MoR is responsible for any post-sale disputes. For example, should a customer attempt to reverse the charges by initiating a chargeback, the MoR will be liable.

Does My Business Require a Merchant of Record Services?

One of the main benefits SaaS businesses with global reach gain when working with an MoR is the all-inclusive nature of the model. Besides vendor & shopper support, marketing tools, CRM & BI capabilities, lead management, and a large number of languages, currencies, and payment methods, the MoR also takes care of all financial, legal, and administrative work, including payments, billing, taxes, and compliance.

SaaS and Software companies that sell locally may be able to act as their own seller or MoR as it’s more feasible to manage transactions within your own country. However, working with an MoR solution is still beneficial as even local taxes can get complicated. Case in point, look at the 14,000 + tax jurisdictions in the U.S.

The Top 7 Risks Facing eCommerce Businesses

Like many other businesses, eCommerce providers face various risks that can affect growth and damage customer trust.

➡️ Identity theft

➡️ Intellectual property violations

➡️ Poor customer service

➡️ Credit card fraud

➡️ Cyberattacks

➡️ Privacy issues

➡️ Non-compliance with taxation requirements

So what is the best way to minimize or even remove these eCommerce risks? Work with a Merchant of Record eCommerce solution with a track record for success.

Learn more about the benefits of an MoR model and how it can reduce eCommerce risk for SaaS businesses on PayPro Global’s blog.

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ActiveCampaign is a marketing and sales automation platform that helps growing businesses meaningfully connect and engage with their customers. Its SaaS platform enables businesses to create optimized customer experiences by automating many behind the scenes processes and communicating with their customers across channels with personalized messages.


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